The share price of the largest Chinese developer, which has been compared with Lehman Brothers, which caused the global financial crisis in 2008, jumped by a third.
The share price of the largest Chinese real estate developer Evergrande on Thursday, September 23, immediately jumped 33% on the Hong Kong stock exchange after news of the stabilization of its financial position.
Evergrande, with the world’s largest public developer debt at over $300 billion, has been compared to the American financial firm Lehman Brothers, one of Wall Street’s pillars since 1850, whose collapse caused the global financial crisis in 2008.
Evergrande has already caused a fall in global markets, disrupting the repayment schedule this week on loans to several banks.
The company also announced a plan to pay out coupons on bonds as scheduled for 232 million yuan ($35.9 million). Investors were also encouraged by the decision of the Central Bank of China to inject a record amount of liquidity into the financial system to defuse nervousness in the country’s second-largest economy after the United States.
Shares of the Chinese developer Evergrande were falling due to the threat of bankruptcy – on the Hong Kong stock exchange they lost 25% in a week, since the beginning of the year – already minus 83. Today, the decline has decreased due to a rebound.
The collapse of Evergrande could lead to a series of ruinous Chinese banks that had given the developer a loan. Behind them, many large companies in the financial and construction sector could go bankrupt, disrupt global capital flows, and collapse stock markets.